THE LAW OF DIMINISHING COSTS: History has shown that it always pays to wait on buying a piece of electronics' equipment. Unless a product boasts novel technology, it invariably will drop in price within six months or a year. And subsequent models will actually be introduced at a lower ticket, as the maker learns to produce the gear with fewer parts and higher assembly line efficiency.

Those "truths" are especially self-evident in the United States, the most competitive market in the world, where electronics companies throw away profit just so they can brag about "market share." And cut-throat discounters, these days found mostly on the Internet, toss more gasoline on the fire to drive competitors out of business. But this year, the applecart could be turned over. Due to circumstances beyond their control, many product makers and retailers may be forced to raise prices on electronic goods, if they aren't doing so already.

LOOK EAST: As first reported by Steve Smith, editor of the consumer-electronics trade magazine TWICE, the CE industry's reliance on China has set the stage for a "perfect storm" of higher manufacturing costs that will inevitably drive up retail prices.

In conversations with executives, Smith has found that many Chinese factories lost money last year and some have closed, reducing capacity and competition. Come June, many more factories will be put on forced idle by the government to reduce the noxious air pollution before the Summer Olympics.

And there's more.

New labor laws in China have pushed up labor costs 15 percent.

Raw materials, from plastic to copper, are all getting more costly, as is the price of energy to fire up the plants and move products by ship.

Oh, and the value of the Chinese yuan is no longer moving in government-mandated perfect sync with the U.S. dollar. So the exchange rate is deteriorating.

As a result, "higher prices could hit just about every [electronics] category you can think of," said Smith. Yet the harsh reality hasn't hit home in all camps, he added. "I've been told that certain national retailers are in denial about the situation."

WATCHING THE POT BOIL: "It's true, the Chinese are raising their prices," confirmed Richard Glikes yesterday. He's executive director of the Home Theater Specialists of America, a cooperative association/buying group for independent U.S. electronics stores that collectively generate a half-billion bucks a year in sales.

His group members are already feeling the heat, with wholesale prices rising on everything from "speakers to amplifiers to a/v furniture.

"The Chinese manufacturers have raised their prices from 8 to 20 percent, depending on the category. Some of our vendors aren't passing it all through. Speakercraft [a major in-wall speaker and accessories maker] recently saw their costs go up 12 percent, while they've only raised prices 5 percent."

EXCEPTION TO THE RULE: The one product category in which we might not see price increases is in the super-competitive world of flat panel TVs.

"But don't anticipate much more in decreases, either," cautioned Glikes.

For one thing, the big-gun, "tier one" electronics companies like Panasonic, Samsung, LG and Sharp that produce the best LCD and plasma panels have now decided to sell their excess capacity to each other, rather than to "tier two" and "tier three" companies like Olevia, Polaroid, Westinghouse and Vizio that are all about the bottom line. They don't have much overhead and can squeak by with a 1 or 2 percent profit margin.

"The 'tier one' companies don't like trading with people who are price leaders. It only brings down the value of their products," explained Glikes. "Let's say LG is efficient at building 37-inch displays and Sharp is good at 42-inch panels. So it makes more sense for them to trade with each other."

GETTING OUT WHILE THE GETTING'S BAD: The TV marketplace in the U.S. is so ruthless that Syntax-Brillian, marketer of Olevia sets, has now been driven into dangerous financial straits.

And even one of the world's biggest players in electronics, Philips, has decided to give up on marketing profitless television sets in the U.S., though it will still sell us light bulbs, electric shavers, digital picture frames, medical equipment and more.

Yes, the Philips and sister Magnavox brand names will continue to appear on televisions here. But starting this summer, the products will be produced and marketed under license to Funai, a low-cost, Japanese builder that also sells goods in the U.S. under the Emerson, Sylvania and Symphonic brands.

In its new, can't lose, royalty-earning arrangement, the (old original) Philips says it will still supervise the new Philips TV brand's quality and offer R&D assistance. But I can't imagine Funai will maintain high-end features like Philips' exclusive Ambilight picture enhancement.

So if you want that - or any really good electronics deals - now seems the time to buy. *